Tax For Employees
Most employees feel they have no tax worries because they are within the Pay-As-You-Earn (PAYE) system operated by their employer and so there is nothing to worry about. However, tax is never that simple. Sometimes tax is underpaid and arrears build up and sometimes tax is overpaid and the chance of a tax refund arises.
What You Need To Monitor
- Any benefits provided by an employer need to be taxed and taxed properly in the right year – this is often done by estimated adjustments to a tax code and such adjustments are often incorrect.
- People with more than one source of income (such as those with a rental property) may end up with a tax liability unexpectedly.
- Tax codes are sometimes issued with a M1 (month 1) restriction which means any impact will only be applied to part of a year so arrears of tax can build up.
- Even when a tax code is correctly calculated sometimes the employer does not receive their copy of the notice or fails to apply it so the correct tax is never deducted and arrears build up or a refund is claimable.
Whatever your situation, it pays to get your tax situation reviewed from time to time – sometimes it only takes a little while to run a check but it can bring a huge amount of peace of mind and sometimes even a refund! Even if you work for a big company with a long established payroll, there can still be issues to talk through.